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Presentation, discussion, and possible action regarding the adoption of an Agreed Final Order concerning Waters at Willow Run (HTC 13600 / Bond 13600B / CMTS 4888)
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RECOMMENDED ACTION
recommendation
WHEREAS, Waters at Willow Run, owned by The Waters at Willow Run, LP (Owner), had uncorrected compliance findings relating to the applicable land use restriction agreement and the associated statutory and rule requirements;
WHEREAS, the ownership group has a history of violations and has signed four prior agreed final orders, most recently in June 2024;
WHEREAS, TDHCA identified new findings of noncompliance during its regularly scheduled 2024 file monitoring review at Waters at Willow Run, and referred that noncompliance for an administrative penalty when it was not timely corrected;
WHEREAS, unresolved compliance findings included: failure to submit annual rents for approval, failure to maintain the specific unit mix required by the HOME LURA, a tenant income certification violation for one unit, and household income violations for two units;
WHEREAS, the final referred noncompliance was resolved on April 27, 2025, after intervention by the Enforcement Committee;
WHEREAS, an Enforcement Committee informal conference was held on April 29, 2025, and Owner agreed, subject to Board approval, to enter into an Agreed Final Order assessing an administrative penalty of $5,400.00; and
WHEREAS, staff has based its recommendations for an Agreed Final Order on the Department’s rules for administrative penalties and an assessment of each and all of the statutory factors to be considered in assessing such penalties, applied specifically to the facts and circumstances present in this case.
NOW, therefore, it is hereby
RESOLVED, that an Agreed Final Order assessing an administrative penalty of $5,400.00, for noncompliance at Waters at Willow Run (HTC 13600 / Bond 13600B / CMTS 4888), substantially in the form presented at this meeting, and authorizing any non-substantive technical corrections, is hereby adopted as the order of this Board.
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BACKGROUND
Property Information: The Waters at Willow Run, LP (Owner) is the Owner of Waters at Willow Run (Property), an apartment complex composed of 242 units, located in Travis and Williamson Counties. All units are restricted at 60% AMI. The Waters at Willow Run, LP is controlled by Atlantic Housing Foundation, Inc. (AHF), a South Carolina nonprofit corporation. Officers for AHF include: Michael N. Nguyen (President and CEO) and Will Saqueton (Secretary and Treasurer). Board of Trustees members for AHF include: Michael Nguyen, Rachel Hayden, Mike Duffy, Ruben Gomez, Stephanie Laxton, James Smith, Bob Voelker, Gina Fernandini, and Darren James. The property is self-managed by a related entity, Atlantic Housing Management, LLC. CMTS lists Michael Nguyen as the primary contact for the Owner and property management.
The Property is subject to two Land Use Restriction Agreements (collectively the LURAs), in consideration for an allocation of 4% Low Income Housing Tax Credits and multifamily housing revenue bonds to build and operate the Property. The LURAs were effective in 2016 and 2013, respectively.
Prior Referrals: AHF and its affiliates currently control two actively monitored developments that are monitored by TDHCA, and it recently applied for bond funding to rehabilitate two other developments. AHF previously controlled six additional TDHCA-monitored properties, of which one was sold in April, and five have expired LURAs. AHF has a history of penalty referrals, regularly failing to submit complete corrective documentation or respond to Department correspondence. During a 2018 informal conference, Owner representatives agreed to attend training, stated that they were hiring additional compliance staff, and stated that they were committed to improving internal processes and accountability to ensure future compliance. AHF made improvements after signing the three 2018 Agreed Final Orders noted below; however, problems resumed in 2021 during the pandemic, and continue today. During 2024, related property, Waters at Sunrise (HTC 14417 / HOME 102231 / CMTS 5046), was referred for a penalty. That administrative penalty referral was substantive, and corrective documentation submitted in response to the referral was incomplete. The Compliance Division asked the Enforcement Committee to move forward with that administrative penalty referral due to a pattern of substantive repeated noncompliance and administrative penalty referrals by AHF. Prior Agreed Final Orders include:
• 2018 Agreed Final Order for Waters at Sunrise (HTC 14417 / HOME 102231 / CMTS 5046) included an administrative penalty of $500.00, which was forgiven when the Owner submitted acceptable evidence of affirmative marketing. This development is still actively-monitored.
• 2018 Agreed Final Order for Redbud Trail (Bond MF018 / HTF 92041B / CMTS 2515) included an administrative penalty of $1,500.00, relating to file monitoring noncompliance including: household income, written policies and procedures, utility allowance, affirmative marketing, and not implementing the Tenant Rights and Resources Guide. Redbud Trail violated this 2018 Order, but paid the full penalty upon demand and submitted final corrections a few days later. This LURA expired on December 29, 2024.
• 2018 Agreed Final Order for Stonebriar Village of Plainview (HTC 99102 / CMTS 2174) included an administrative penalty of $500.00, which was forgiven when the owner submitted acceptable evidence that it had completed exterior painting and driveway repairs. AHF sold this development in April 2025.
• 2024 Agreed Final Order for Waters at Sunrise (HTC 14417 / HOME 102231 / CMTS 5046) included an administrative penalty of $7,500.00, relating to file monitoring noncompliance including: household income, utility allowance, annual rent approval, unit mix, asset verifications, and not implementing the Tenant Rights and Resources Guide. Waters at Sunrise submitted partial corrections, but violated the order. It paid the full penalty, and then submitted the remaining corrections. This development is still actively-monitored.
Current Administrative Penalty Referral: TDHCA identified new findings of noncompliance during a file monitoring review conducted at the Property on September 4, 2024. The TDHCA Compliance Division referred the following findings to the Enforcement Committee for an administrative penalty on February 25, 2025, all of which were resolved after referral, but before the scheduled informal conference:
• Failure to provide pre-onsite documentation.
• Failure to provide eight points of social services.
• Failure to provide Tenant Rights and Resources Guide Acknowledgment for four units.
• Failure to collect Annual Eligibility Certification for two units.
• Program unit not leased to a low-income household for one unit.
Penalty Analysis and Factors: Owner participated in an informal conference with the Enforcement Committee on April 29, 2025. The Enforcement Committee analyzed the required statutory factors for determining an appropriate administrative penalty as follows:
Debarment eligibility: AHF currently controls fewer than five developments, so it is not eligible for debarment consideration based upon repeated violations in a portfolio, but an administrative penalty is appropriate.
1. The seriousness, extent, and gravity of the violations: There are no health and safety violations, and there is no evidence of fraud, waste, or abuse. Accordingly, the referral is less serious when compared to other types of referred noncompliance, and most of the referred noncompliance relates to record-keeping and organizational problems. However, it is serious that no supportive services were being provided at the time of the monitoring review. Additionally, the owner’s continued and repeated failure to respond to TDHCA monitoring is serious, reflecting supervisory and organizational problems that could lead to more serious future noncompliance.
2. Hazard posed to the health or safety of the public: There are no hazards posed for health or safety.
3. Hazard posed to the public’s economic welfare: There are potential economic impacts for failure to collect a complete tenant file to prove initial eligibility, however, overall impact of the current violations is limited since all affected households did qualify for the program. Supportive services can also have economic impacts depending upon services selected, for example, food pantry, scholastic tutoring, and notary services were among the services selected, all of which are economically valuable for tenants.
4. History of previous penalty orders: Four prior orders for related properties. This history has not changed AHF’s pattern of failing to submit timely responses to TDHCA monitoring.
5. Efforts made to correct the violations: All noncompliance was corrected shortly before the informal conference. However, Owner failed to submit any response to the Compliance Division until the Enforcement Committee intervened. This is a repeated problem, with AHF not responding fully or timely to deadlines set by Compliance, but quickly submitting corrections after referral for a penalty. During the 2024 informal conference, Owner representatives stated that their policy was for a single staff member to be responsible for uploading corrections to TDHCA. That person failed to submit corrections in response to the corrective action deadline, and then submitted incomplete documentation in response to the administrative penalty referral. She is no longer with AHF. The Enforcement Committee noted in 2024 that this is a risky strategy, and owner representatives admitted that there was no chain of supervision for reviewing corrections, or managerial oversight of deadlines. They had a new management team, all hired during the fall and winter of 2023, and they implemented changes in May 2024, including a shared calendar for TDHCA deadlines to be handled by the management team, which included the Director of Property Management for AHF, Associate Director of Property Management for AHF, and the Compliance Manager for AHF. They would share responsibility for ensuring timely responses to TDHCA deadlines, and would meet every Monday to discuss the calendar and upcoming deadlines. Additionally, the Compliance Manager for AHF would double-check all corrective documentation from the site prior to uploading corrections to TDHCA going forward.
The Enforcement Committee thought that 2024 plan was adequate, however, they noted at the time that the primary CMTS contact, Michael Nguyen, does not respond to any correspondence, and defers all responses to staff. Enforcement Committee members were concerned that, given past patterns, the changes discussed by the new management team may not succeed long-term without strong supervision from Mr. Nguyen, especially if there is additional staff turn-over. As the Committee feared in 2024, all of the problems noted above were repeated in 2025, including failure to respond to a TDHCA notice of noncompliance due to AHF staff turn-over without adequate supervision. Michael Nguyen attended the informal conference on April 29, 2025, and indicated that it is still his policy for a single staff member to be responsible for compliance matters and uploading corrections to TDHCA. A new management system called Asana will now be used for tracking workflow. Supportive services responsibilities have been transferred to AHF’s Community Services Department, reporting to director, Latoya Jones, who in turn reports to Will Sasqueton, the Secretary and Treasurer for AHF.
6. Any other matters that justice may require: There is a history of prior penalty referrals, and AHF signed four prior Agreed Final Orders, as outlined above. The TDHCA Compliance Division asked the Enforcement Committee to move forward with this administrative penalty referral due to a pattern of repeated noncompliance and administrative penalty referrals by the Owner. AHF currently controls fewer than five developments, so they are not eligible for debarment consideration based upon repeated violations in a portfolio, but an administrative penalty is appropriate.
Additionally, there is a pending 4% HTC application to rehabilitate Water at Stone Creek. It had a previous 1993 Bond award that went inactive for monitoring by TDHCA on December 31, 2008. The previous participation review classified AHF as a category 3, and many conditions were set for this award due to the penalty history noted above, which the Department hopes will help to avoid future penalty referrals if properly implemented. A list of those conditions is at Exhibit 1.
7. Amount necessary to deter future violations: AHF does not communicate well, which makes it difficult for TDHCA to efficiently monitor them. Continued future penalty referrals for AHF are likely unless it implements the Bond award conditions noted above, which will require investment in staff and systems. AHF also indicated that there was a cost to implement Asana. AHF violated the 2024 Agreed Final Order for Waters at Sunrise and paid the full penalty, but still ignored the corrective action deadline for Waters at Willow Run, suggesting that a maximum potential penalty assessment is appropriate. The maximum potential administrative penalty for the current referral is low because the noncompliance is not extensive, and all noncompliance is corrected.
Consistent with direction from the Department’s Enforcement Committee, an administrative penalty in the amount of $5,400.00 is recommended. This will be a reportable item of consideration under previous participation for any new award to the principals of the Owner. AHF has accepted these terms.